Tuesday, 2 August 2016

New blog: making housing affordable again

A new local blog focussed on making New Zealand housing affordable again: Making New Zealand. It’s mostly by the good guys. A shame about the byline, although I’m told it’s to help capture local searches about urban planning (you see what I did there?):

The politically unaligned Making New Zealand blog was launched yesterday by an independent group of professionals who want to raise the level of public debate and understanding about housing, infrastructure, cities and planning. Contributors to Making New Zealand span the political spectrum but their aim is for New Zealand to have affordable housing with a clear understanding of what New Zealanders prefer in their housing choices…A lot of urban policy is based on plausible assumptions that actually are not supported by real-life experience anywhere. For example, changing zoning to allow more intense development is always forecasted to unleash far more supply of housing units than what actually ends up being built. This is mostly because these zoning changes cause land values to increase even faster than otherwise, and as Arthur Grimes pointed out in a 2010 paper, all the profit potential is captured in land values rather than in newly constructed buildings," pointed out Phil Hayward, an independent researcher, writer and lobbyist on urban policy issues. We should learn from the decades of over-estimated housing supply by urban planners in the UK, and avoid a replay of their costly and now-irreversible blundering.

If it isn’t already too late.

When governments start talking about building more houses, ignore them. Most of this junk talk is a distraction to what is critically real. Really, the focus for the solution boils down to one basic question: How much does it cost to build a new home, and on an all-up per square-meter basis?... Because if people can build a new home at fair cost, the result in response to even a modest price inflation will be a building boom. And not a price boom, as that new supply from a building boom can only normalise prices. In other words just get rid of the artificial barriers, and let the market function.

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